PERPETUAL SWAPS with Jonathan Caras of Levana

Transcript

welcome to the Anup my guest today is Jonathan Caris he is the founder of Lana it's a platform for fully collateralized Perpetual swaps so in Today podcast we're GNA Perpetual swaps understanding what they are and why they're so unique to crypto we'll also talk about Lana's features and specifically one that I'm interested in which is insolvency protection and we'll also talk more broadly about Cosmos Defi and where Lebon sits in that ecosystem I'm also dying to find out why he thinks the app chain thesis is dead make sure to hit the like button hit notification Bell And subscribe to get notified when I go live every week and remember that none of what we

discuss here on the interop is investment advice and if you enjoy this content please consider staking with us we're validating on OS Quicksilver Juno noas and osmosis just look for interrupt in the my guest Jonathan is coming up next right here [Music] on hey Jonathan hey thank you for having me uh I'm Jonathan Caris uh I am head of

communications at Lana um and I'm excited to to be here and Sebastian I think what are we we've known each other for like three years now I don't even remember yeah you know yeah we've we've interacted quite a few times I think I probably met you at like dabc con or something I feel like that's where we met in Berlin and uh just yeah we we interacted a couple of times but I I actually don't know a whole lot about your background I know you worked at starkware for a while uh I know you did a lot of stuff in ethereum so yeah curious to maybe a little bit deeper uh into how you uh became head of coms at laana sure so well I mean I um my background is in

computer engineering I'm I'm from DC originally uh I've been living in the Middle East for about 22 years and I um I I built a Communications company out here which got 26 million subscribers um that I sold in 2015 and then in 2018 I um I built a company that we and we exited to Snapchat it was called screenshop it used computer vision to turn your feed into a shopping cart and through I mean you know what now would be called AI but that wasn't the term then was machine learning and uh and then uh I you know I started getting

into Bitcoin in 2016 um right as the run from like you know the 900s up to like 2400s um 2400 and uh in you know after the uh blowoff top of 2017 I put together a crypto hedge fund uh called lion chain capital and uh we did a lot of early stage Investments um got to travel all over the world uh meet great guys like you and we you know we uh just started talking to Founders and you know my previous experiences being a builder in mostly mobile but you know in Communications and social networking and other things like that uh were showed

that there was a lot of of skills that came from web 2 that were lacking in in the web 3 world and so I've always been curious and really fascinated by by teams that try and focus on um you know sensible business models or economic designs um building things that are designed for a mass audience uh building things that are are fun and not necessarily just finance and and and that's kind of where I've been you know focused I I led business development for almost two years at starkware like you mentioned uh I got to to speak to about 340 different dep development teams and

companies and you know wallets and everything we uh we closed dydx and uh and Argent so rare Gods Unchained uh immutable um the diversify you know and a a bunch of other cool projects um while I was there in in the Defi and nft space and um and I joined uh uh dely labs when they kicked off in 2019 to make an incubator for a number of different projects on Tera and uh so I uh that that was the origin story of Lavana and and Lavana is a Perpetual swap uh currently deployed um in the cosmos ecosystem uh we have had over um

eight we we launched it about 57 days ago and we've had about $82 million of trading volume so it's we're at we're 400 days into the bare Market as a as a community so to to launch um and to see those numbers uh shows that what we have built which which is a very unique pers product um has has really attracted the attention of the of the cosmos community and Beyond cool yeah I didn't realize that you had done so and that you've been around for so long um you you were you were telling me that uh you were saying that you know your

interest was in in products that are are built for users what do you think are the best uh attempts or successes in crypto to build products will actually want to use and that aren't just Finance well I think stable coins are are the killer use case just in general you know it's the it's borderless payments is a massive massive industry um and it's a huge headache being an ex Patriot you know I I left America over 20 years ago um I've always kind of been either unbanked or or half banked within America and just being uh you know having been a traveler um you know

having spent time in in Europe and and Asia it's um it's really non-trivial to to move money and you see um a lot of people that you know double digit percentage of their weekly income is just spent you know by money changers and and transmitters so that's that's an obvious huge use case um you know besides for just uh bill pay and and Money Transfer I'm very bullish on uh on self- Sovereign uh interoperable um uh you know we use the term non-fungible it's really an awful term because it doesn't mean anything to

anybody outside of the industry you know it's like it's uh it's it just goes to show like how far we have to grow but I think that um if looking at both so rare and gods Unchained which are are both projects that uh I got to work very closely with you can see that they took an itch that existed outside of the crypto space whether it was you know Fantasy Football uh or whether it was things like magic the Gathering or you know those types of even Pokemon and then and then really going to a zero to one with the self- sovereignty aspect uh and allowing for third parties to be able ble to build interoperable software

on top of it um is is really impressive and and it comes down to what I think is the core um innovation in the space which is uh kind of a a merger of um of two transitions that we have seen over the last probably 50 years um of software development which is the the migration of software as a product to software as a service like we don't buy Photoshop anymore when I was a kid we bought Photoshop you know we had Photoshop 7 we bought no we cracked Photoshop when we were kids he yeah that's you want to say that yeah um but um anyways it was a it was a product there was no monthly I

mean who's gonna pay 600 bucks like in like 1998 come on um but uh I especially at 14 yeah and yeah and you're like like a kid you know um but anyways uh yeah those are the lime wire days um so we so there's this migration of software being a product to software being a service which means that I'm expected to pay either the more that I use or on a monthly basis uh and then there's also another uh phenomena which is that open source creates infectious standards that then allow for interoperable um uh you know Legos you

know we built the the video call that we're on today the codecs that's compressing our video and our audio were not made by what is this streamyard docomo a homogenization of Technology IES through uh primarily through open source uh is what makes you know the operating systems to the computers that we're running um you know uh feasible uh which allows for you know software developers

to be able to make a fart app and then make a million dollars off of that um and there's there's always kind of been this problem within the these two worlds colliding of software as a service that you pay for on a peruse basis and uh open source which doesn't really have a good business model but has a good um verality model and blockchain is really the um the the the the meeting of these two behemoths where we can have defensibility through um you know Sovereign ownership of digital assets through tokenization uh we can have distributed governance and co-ops we can do it all open sourced and we can collect Revenue uh that's that's

defensible and can compensate the the actual uh movers and shakers behind uh the protocols themselves so this as a as a just a general economic model applied to the entertainment industry is incredibly interesting because it allows for you know I mean you know the uh we we joke uh saying like the Uber of X you know the Uber of dog washers the Uber of whatever but but really there's um you you know you can make the Uber of GPU the Uber of storage the Uber of Netflix The Uber of whatever and um and and uh blockchain and you know open- Source uh

interoperable tokenization um you know methodologies uh enable a really a really compelling and optimistic future which I think is the the in the complete opposite direction of a lot of the um futurisms that that we have today you know with like Central Bank digital currency and you know the the government being able to tell you you know how many beers you're allowed to drink with your salary and you know things like that yeah this is really really fascinating and I think something here touch on is this idea of like a blockchain as a business it's sort of you you could

think of blockchains as a way to uh extend um extend the ownership of a business to a collective right to to a collective people uh that don't necessarily know each other right so you're you're but opening uh the ability for a business to to exist um as a as a non- singular thing and so I'd like to maybe ask you then why you know isn't that sort of the the idea of an app chain where you have a chain that that is itself a self-contained business and you know why do you think app chain thesis has failed well I think it's um it it conflicts too much with uh the um

the uh you know in what enables entrepreneurship is where you can um where the cost of failure uh it diminishes over time uh and then that enables rapid iteration of whatever it is that you're building and the the the overhead um of infrastructure is the complete antithesis antitheses it's the complete opposite um of being able to uh stay hyperfocused um address uh consumer facing problem and then iterate on that until you achieve product Market fit and

then focus on scaling and if you look what the op chain thesis requires is you need to um you need to and I will use I will factiously use the word bribe where more accurately the word is incentivized but I think I get the point across um you know more eloquently if I say bribe you have to bribe validators to play nice you have to bribe wallets you have to bribe um you have to bribe Bridges you have to bribe uh block explorers in order to play the app chain game there's a whole Cosmos Mafia that you need to bribe in order to get into there now obviously it's not like a bunch of you know people in like slick hats and you

know um you know in moonshine rigs um you know I say the word uh you know Mafia lovingly um but there's a massive amount of overhead that is uh required in order to be an nchain and it and in many cases it's about who you know um more and how much money that you can pay more than anything else whereas um if you look at what makes every success successful um uh startup is I don't I can you know I I don't need to manage my own servers I can just get a grant on AWS and you know it's like well you can snap your fingers and AWS will give you

a grant for for 25k um it's like you know they're like these they're they're passing them out like tissues um you you know you um you want any basic infrastructure like logins you know I can just use Google uh single uh you know single sign on uh I can use Facebook sign on if people still use that I'm not sure if they do but once upon a time that was very popular so what's um what's always attracted me to to Cosmos is the um you know is also very similar to just the the the highle concept of um of of gradual decentralization is that with Cosmos as

long as there are permissionless um well uh you know well funded with liquidity and uh well you know uh Bridge provided services like what you know Juno I think once was um in its Glory Days um then there's places within Cosmos where people can deploy code can quickly iterate they don't need to worry about how am I going to incentivize you know $5 million of liquidity to come over like Leana right now has two point you know we've been live for two months we have $2.1 million of of of tvl of uh total value locked um we've done over $80 million of trading volume uh if we had launched on our own

chain I think we would be at maybe if we were lucky one tenen on both of those numbers because instead of focusing on providing a good product for an end user we would have had to focus on well how are we going to bribe the Bridgers how are we going to provide the bribe the liquidity providers how are we going to bribe the wallet you know operators to list us um and that would have taken away from actually being able to provide uh a quality product to a growing audience but I mean from from from what I know of you I've had a couple conversations and what I what my sense is that who likes the sovereignty and you know doesn't want uh let's say the government getting in your

business and this sort of thing uh don't don't you think that the the idea of sovereignty as an app chain makes sense from that perspective where when you're running your own app chain well you don't have to you know worry about uh being at the whims of any technological changes economic changes to an underlying security uh provider uh does does that not uh does that aspect of the app chain thesis not resonate with you and maybe make sense for certain categories of applications I mean like my my my like sort of app chain is that they exist on one end of the spectrum of the way that one can deploy applications

and just like you know not every company goes out and builds their own data center infrastructure not every application is is is well suited to be an app chain that's reserved for uh certain types of applications and I also think I think that it is going to be increasingly hard to be to build application chains for the reasons you mentioned uh but there may be a graduation path where you start as a smart contract you go to being uh as a a settlement rollup or maybe a sovereign rollup and then you eventually graduate to being an OP chain and sort of give one example of an application that went from you know

being a smart contract on ethere to uh being buil on startare and now um is is building their own app chain and sort of goes through the paces of growth to get to the point where they have sufficient amount of money power influence users demand their own chain and sort of be in full control of Their Own Destiny is that something that makes sense to you to think like application change across the board don't make any absolutely and no absolutely the um it would make no sense for for you know for WhatsApp to be run on AWS it wouldn't make from a sovereignty perspective from a security perspective uh from a a cost

savings perspective it you know WhatsApp needs its own data center you know so and Facebook invested in building its own data center which I probably predates WhatsApp but uh but that that's the eventual growth and I think that dydx is a perfect example um of the I think also the beauty of uh of what what we have in Cosmos because I do believe that Cosmos is the most technically Advanced um blockchain solution you know especially if you want to build your own chain I think that there's you know people at our heels that are are are you know that that our Gap and Advantage technical Advantage is much smaller than it was a year ago um you know with things like igen lay with a zkm roll you know roll up with bass you know

basically spinning out their own um you know uh optimism chain with Avalanche what do they call them zones uh forget what the Avalanche uh subnets that's it yeah yeah the subnets umos Z yeah uh oh they don't use zon ah I thought they also called them zones um you know i' probably just have been using zones because I've been too long in the cosmos ecosystem um and and then even po polka dot calls them subst States um yeah I believe is it substrates or no pars so who's so substrate is the thing that's connected through a parir

whatever substrate is the is the framework substrate is kind of like the cosmos SDK equivalent in pogon exactly exactly so the um what I love about the idea that you can start by being an application on an existing um on an on an existing app chain um in you know a predefined Zone and then uh be able to take that same code and then spin up your own chain with either me security or um you know or o various other uh subsidized security uh implementations and then eventually just be completely self self- Sovereign and

all of that without having to rewrite your soft rewrite your stack what dydx had to do is they first built on um they first built on ethereum and solidity then they were built on uh Stark X using Cairo and then now they're they're being rebuilt um on Cosmos and I'm not sure what language that they're built on um but I'm sure it's not Cairo so it's I believe it's km wasm is it it's not uh it's it's not built actually as a module I don't know no idea I think they're doing both I think there's modules and probably some amount of yeah that that makes that makes perfect sense um although I don't know yeah yeah and so

uh yeah it's all right uh yeah nobody's uh yeah so the um so I think that the the uh just like how what I mentioned earlier in the call is that that there's that there's like there's a healthy path to eventual uh de decentralization you know because every project even Bitcoin starts with you know um Satoshi and Hal being the two node operators and then you know and then it becomes you know more open and more open until so Satoshi doesn't even exist anymore and then um then there's the you know then there's the this this gradual you know where you you have an application it doesn't have

a token then you launch a token the token is primarily owned by you know VCS and uh and team and then you know lockups distribution farming and then it's uh it's it's you know it becomes broader and broader until it's really owned by the community and and the the keys are really passed over and then you have you know a a decentralized um governance so what Cosmos allows is decentralized self- sovereignty and infrastructure to be a part of that uh Evolution and narrative and I think that that's what's most attractive cool well well let's uh let's to Lana a little bit and I I just realized as we

were having this conversation that Lana is not an ad it's deployed on osmosis I believe y yep we're deployed on osmosis yeah I think I knew that back in my head but then like had a doubt um yeah why did you choose to deploy an osmosis and like what's the process of deploying an osmosis I guess it must be like all yeah explain how that works um well first you you have talked to the osmosis team um and you have to get them to be excited about it because do you have to bribe them what's that do you have to bribe them with with stickers and cookies you know um and you know hug yeah hugs and hugs and kisses no no no they're the pleasure to work

with um you know you uh it's a it needs to be synergistic and it needs to be very high quality so again it's not you know if we were a scrappy startup you know that hadn't built you know multiple previous um you know leverage trading products that we probably would not been relevant for us to be deployed on osmosis because the bar is very high um and then um the uh you know then then you have to write a commonwealth proposal and then on the Commonwealth proposal you have to argue with a bunch of anonymous people online um about a bunch of stuff um and uh and then you know if that goes well then you

deploy on chain um and we had about I think it was about 60% said yes 20% abstained and 20% said no so you know we kind of just like slid through you know like by the What's the phrase by the skin of your teeth by I I don't know what it was uh I don't think your teeth have skin so it's probably not it but um but it was it was less uh it was you know there were definitely people that were not interested in having Lana on the Chain um and we appreciated that and and then we were given um a key like a a whitelisted key that allowed us to be

able to uh deploy contracts and then uh and know that key is is owned by multisig holders and then we've deployed since then um the initial contracts I believe five or six markets and some or some uh like keeper Bots and oracles and you know and and we've been up and running now for almost two months cool so like I I see this on I saw this on Lana like this this this concept of real yield and I know uh somaler also uses this uh this this kind of this nomenclature what does that mean what what

is real yield non-real yield or whatever other kind of yield people are getting um there is a general Concept in crypto that you can just print money at a thin air that you know there's there's this uh there's a concept where let's say that I print a million tokens let's say even let's let's let's say I print a 100 million tokens and then you say oh that token looks nice can I buy one off of you and I say sure I'll sell it to you for a dollar so now um what and I I have just sitting in a wallet whatever 100 million minus one is so 99 million n there's a lot of NES in

there um so now my market cap is100 million out of there like my market cap went from zero to $100 million because there was a a value transfer of $1 and I could have even lent you that dollar to buy it off of me so it's um there is you know there's there's a lot of Fuzzy Math when it comes to valuations in crypto and um and there's there's ways that you can incentivize people now that you have bought my one of one of my tokens for $1 now I can go

and anybody else who somebody wants to lend me $100,000 I can say fine I will give you 100% APR on that now how do I give them 100% APR I take a h 100,000 of these tokens that I minted that you bought for you bought one of them for $1 and then I slowly trickle them out and as long as I don't trickle them out too much and as long as there's more hype demand for the token um than there is more there's more there's roughly the same buying pressure and selling pressure than my um hyper inflation um can provide a yield which can

incentivize people to provide liquidity and to uh perform actions such as uh you know trade or wash trade or or you know any other type of action that I might want to incentivize now that is called not real yield or that's just called yield um and so what real yield is is intending to articulate that what you are being paid is not you're only being paid by Capital that entered into the system it's a Clos Loop and it's zero sum so you can only be paid if you know if if you're being

paid a dollar that means that somebody else paid a dollar um and if there's any protocol fees on top of that you know let's say that there's a a 10% protocol fee so then if you're being paid a dollar that means that someone was charged A110 so Lana and I'll pull up the numbers today um is you know if we go on osmosis so single-sided deposits of adom are paying uh 42.434652

uh the Lana smart contracts are taking that um Capital that Traders are paying and giving it directly to the liquidity providers um and you know Bitcoin is 43.82720 per. ethereum is 22.8 n% so we're seeing double digigit real yields which is by far the highest real yield that you can find not just in Cosmos but pretty much in any crypto space um today and um and so we're very proud to achieve that we achieved it with lots of hard work in terms of optimization of math and we achieved it um probably by

being generous that we're taking the fees that people are are uh are paying to use the product and it's an excellent product you know the UI for Lana is just really easy to use um the apis um that allow you to plug into your existing trading systems um you know are very robust and well defined and the Securities of our well-funded model attract large traders that have been apprehensive to date to trade at these large volumes um on competing apps within the cosmos ecosystem so so let's let's dive into to this idea of Perpetual so by by in

like I'm Trader I'm a very sort of conservative user of Def I never had an FTX account I've never used perpetuals I do very little derous trading uh you know I borrow and lend and like you know do a little bit of that but but but very very conservative user of defi uh you what perpetual and like why is it unique to crypto like walk us through what a Perpetual is and um and and how it's used by Traders sure so a Perpetual is a type of contract which unlike an option contract doesn't have a predefined expiration date that's an is that I want to have um I want to have usually leverage exposure

they're long short and and Lana provides um 30X leverage long and short on all on all your favorite crypto assets and the um essentially you're taking a leverage position and then you're paying an ongoing fee and there's a few different ways uh in order to be able to generate The Leverage it could be generated synthetically um where the underlying assets are stable coins and you're essentially just like paper trading uh almost like a bucket shop um you know Longs versus shorts and there's some type of funding rate uh to try and balance the Longs and the shorts against each other so that the um the exchange

itself minimizes its its uh risks around insolvency and then there's also uh notional backed uh crypto markets uh Lana supports both what's currently deployed on um on osmosis are the latter which I'll explain in a second which are Crypt assets um and with Crypt assets you actually are borrowing the tokens that are generating your leverage so like for example if forget about um about uh you know any complex dap if you had one Bitcoin and you wanted um 10x exposure you could go

you could borrow another nine Bitcoin then Bitcoin goes on a run it's now worth 100K you pay back your loan and then now you benefited from the runup that you had with those extra Bitcoin now because you were borrowing you're going to pay a continuous fee but depending on the contract it could be a Perpetual loan thus a Perpetual contract meaning you can borrow those extra nine Bitcoin for as long as you're willing to pay for them and then the market will determine your utilization ratios what is the the reasonable rate to

um to charge you and that the contract is flexible um and the reason why it's so Crypton native is that it's perfectly um designed for smart contracts you know I know like for example in the Lana methodology which is called the well-funded um perss where you actually are borrowing those other nine Bitcoin and they're just you know in a smart contract that's attributed to your account um all of the trustful actions of you know the the current like Wall Street options Market of uh of you know is it do they actually have the

underlying assets you know are they going to go insolvent like I could sell you um a you know a contract that gives you the rights to purchase a 100 Bitcoin at you know $50,000 a year from now and I could sell that to you this is done all the time in uh on Wall Street but now you have to trust me that I actually have those 100 Bitcoin or if I don't have this 100 Bitcoin I've got the cash in some type of an insurance fund that if you're right and your option you know closes in the money a year from now and you want to exercise that option that I'm not going to just go bankrupt and be like sorry man I don't have the money to buy you know bitcoin's at 100,000 you've

got the rights to buy a hundred of them so that's a boatload of money that's what's that $10 million I don't have $10 million you know even though you paid for this option A lot of money I just can't redeem it I'm just going to go bankrupt so what we saw you know in uh in markets within tra within CI centralized um you know crypto Finance uh is that when there were the legs down um of the last year in this bare Market many of them went bankrupt because they were just they didn't have the insurance to be able to cover insolvency and and then also we saw within defi many um leverage trading

platforms just became insolvent because they were pegging everything um to crypto assets while they collateralized them with with uh stable coins you know the stable coins either didn't keep their Peg or just uh the markets that the shorts won so much money that the liquidations of the Longs couldn't pay for it it and so then we end up with these situations where you get a bank run and because it's on chain it's even worse because everybody can see when a crypto platform becomes insolvent I'm sure you you follow PEC Shield or you follow some of these other accounts which are like hey you know I don't want to name names because that's kind of mean but hey X Y andz protocol you

better check your contract because it looks like all your you know half your funds were drained everybody can see it so then whoever ever everybody now rushes to pull all their Capital out and it just exacerbates the problem to the point where um these these thing these platforms just completely go insolvent so Lana was designed to prevent that by taking a well-funded model that instead of having a global you know either offchain or or you know uh IOU Insurance Fund the totality of the debt that could be owed to each position is actually locked in each position and we give discounts to Traders by adopting low

take profits so the total exposure on a per position basis is as low as possible I want to come back to this well funded model idea in in a second but first I want to I want to ask like a a really question about a perpet about perpetuals that came to mind here and you know you're probably going to tell me well this is stupid because like this obviously is preventing it but um if if the Perpetual ex if the Perpetual swap basically allows you to borrow an asset indefinitely in time why wouldn't a user to say okay borrow five Bitcoin uh at current price and I'm just going

to keep that Bitcoin perpetually until you know such time as like Bitcoin is worth you x amount right until the next Bull cycle uh and just pay back the loan then uh why is that not possible like what what prevents people from doing that or well unviable because it just seems like that would be the thing to do for sure that's a great question so it's about the fees so first of all there's a liquidation margin meaning that if your uh collateral to your loan drops below a certain point um then you'll be liquidated it could drop below a certain point because of two things either the uh the collateral which is in this case a Bitcoin um uh loses its value because

the price of Bitcoin goes down um or the fees that you're paying which are always chipping away at your collateral will liquidate you so that means you've got to just con you know you would just have to if you could hold it you know um uh uh imper uity there's a lot of words that I know in English that I don't yeah perpetuity I don't know how to say out loud um but uh so the uh so you could hold it forever but if going back you know right now Lana is paying to liquidity providers who are providing that liquidity they're paying we you know

43.82720 three months six months you might end up losing half of your you know you'll lose a huge chunk of your principal um and you might get liquidated because your principal didn't meet the minimum uh liquidation threshold so most per positions are open for less than a week because of the fees okay interesting so so actually Traders are are are not entering very long with pers they're entering very short positions so they're making uh perhaps like very concentrated leverage trades on um in the market yep inflection points in the market okay

thanks thanks for for offering that that bit of precision um interesting so who who are the US I mean are these just like you know DG or are you targeting more specific or more uh sophisticated defi users or with like institutions like who's who are you seeing use in the platform well it is um so there's there's there's definitely the dgen play that's like YOLO 30X leverage Bitcoin adom long or the guys that are like osmo stinks I hate that token I'm gonna short it you know to to the to the dirt um and so they'll they'll they'll um you

know they'll they'll try and swing trade with leverage in order to be more Capital efficient also the nice thing with Leverage is that um your upside is like is based solely on your conviction and your downside is based on your Capital allocation so I could risk the risk reward ratio in per In Perpetual trading is much better than in spot trading because you know where else it could it be that I deploy $100 my total exposure of loss is $100 um but I take this 30X leverage position that could earn me $5,000 in in like a week or a month so your upside is five grand your downside is you lose a

100 bucks so there's nothing else that can do that besides leverage and that's what makes it that's what makes it popular for the DJ are strategies like sort of are are people like um implementing strategies where there are I I think the right term for this is Delta neutral uh they're implementing like a deltra neutral strategy where they're longing and shorting and like with some degree of proportionality so that you know they're all they're sort of hedging those positions either way so that they don't lose that initial collateral like this is total like trading newbie here you know asking you some very basic questions probably that are are a bit

lame but yeah well you mix two concepts so I'll unpack them one is how do you protect uh how do you protect your collateral from just like getting wiped out so you do that with a stoploss so you so in Lana um users are incentivized to create a takeprofit which is the position will automatically close once you reach a certain amount of profit and a stoploss which is the position will automatically close once you've lost a certain amount of money and so this way um Leana is actually a very low risk or it's you know there's always risks with leverage trading but in terms of comparing it to many of the other leverage trading platforms Lavana is very um vanilla you know lowrisk you

know designed for your grandmother um you know she could say like look if I I don't need to make that $5,000 I put in a hundred bucks if I get a double close if I lost $10 close and so now you've got that asymmetric reward just kind of set and you can run that as many times as you want and just you know there's a numbers game there that you know that people tend to be right um over time and so if you can just if you can make sure that you're when you are wrong there's a very small consequence but when you're right there's a big reward then you know you don't need to be a dgen so I would call that that's kind of like the um the mama

bear you know if the papa bear is um you know is just out there you know Max leverage Max exposure don't need no stop losses um that's the papa bear the mama bear is is setting those boundaries so that she's only losing a little bit if she's wrong and she's gaining a lot if she's right and then the baby bear is actually delta neutral which is what you explained now because there's something called a funding rate where where some one side will be paid um fees a Trader between Traders um you know the whatever's the popular side whether it's long or short the popular side pays a fee to the not popular side so they're actually paying

a fee to two participants they're paying paying a fee to the not popular side of the trade and they're paying a fee to the liquidity providers who they're borrowing from so I'll tell you what the numbers are right now so we don't have to you know philosophize um so on Adam Longs are popular shorts are not popular shorts are getting paid 76 76 .2% APR to hold the short on adom I'll pull up uh Bitcoin on Lana today these are real numbers if you are short on Lana on bitcoin you get paid 71.8 to% so if you think the market is going down

you could actually make a you know a nice bit of money and then it's not like the fees like I said before um where you know you're you actually get paid to hold this type of a short position um um and then you know just to finish it off like let's talk about eth wow eth's um people are very bullish on Lana for um eth shorts are getting paid get this 273.5 n% to take a short on Lana so so now you could either just take it blind as like I want to take the short or you could take it Market neutral so like let's say for example that so that means people

want to think that the ethereum is going down no because the shorts are getting paid so that means the shorts are the less popular side ah okay right okay so people are bullish the shorts are getting paid okay the less popular side gets paid the more popular side pays you know it's like taking you know it's like the you know the you know I I was raised that the girl doesn't pay when you take her out to to dinner you know that's uh because I'm the less popular one you're well raised sir you know there's plenty of guys that have a you know that are that that don't have a

big bushy beard and are not you know uh you know that there's plenty of guys that she could take out to dinner tonight so um I'm the you know she's the less popular side I'm the more popular side I have to pay um and uh so the um so what what people do uh is you can get paid to go long atom by buying liquid stake derivatives of atom and you could pay 20% APR so imagine that you bought $100 of liquid stake uh of St atom staked atom now imagine that you took another 20 bucks and you brought it to

Lavana and you shorted Adam with 5x leverage so now on Lavana your short has exposure of $100 worth of atom now you bought the liquid stake derivative of a 100 bucks of atom so you have a 100 bucks long exposure and 100 bucks short exposure so now you're Market neutral you're delta neutral and you're getting paid 20% for your 100 bucks 20% APR for your 100 bucks long and you're getting paid 70 whatever per um to uh to short so you don't have exposure to the price of atom but you're getting paid a boatload of of

APR and that uh that is called Cash and Carry or basis trading and that I would say is about a third of the active Traders on Lana are performing strategies now obviously I'm kind of romanticizing it you need to make sure you don't get liquidated you need to make sure that the flip that the uh funding rate doesn't flip and now you're actually paying a boatload instead of getting paid a boatload um so a lot of people write in typescript we have we have uh apis for typescript and we have a lot of sample code there so people I I've met guys that that have been making bank over the last two months on Lana and um and chat GPT wrote the whole trading thing for them

like it's amazing it's it's amazing the world that we live in um and uh you know we publish via API like historical funding rates so people can really um they they can catch it if it moves past a certain threshold with a certain velocity there's all kinds of things there but I think like first you know for people to just play around with it um I've opened just manually um I don't have time to to build all that stuff um but to just even manually um you know try and do some basis trading or or try and catch a swing you know I put 10 bucks on an Osmos short you know and I've made a couple bucks off of it so far um you know when uh when the

market was very bullish I'm still getting paid um what are we paying on osmo 44% to go APR to go short on osmo um so there's uh you know there's there's a lot of different strategies it's not only for degens it's also for hedging like let's say you were staking um into uh Adam and you wanted to un to into unbonding um which is like I think a 14-day process so for those 14 days you might want to lock in a price so you just short at them and so again you've got this long which is illiquid and it's stuck so you you partner it with a short that that's that's liquid and not stuck and um and you you take the edge

off yeah okay now that makes sense yeah these are really interesting sort of use case strategies uh especially this this un unbonding period one so what does it mean that Lavana is well-funded so it means that we don't use a centralized Insurance Pool that we actually every position carries with it the exact size in you know you can it's not really insurance but for sake of of analogy carries with it um borrowed fees from liquidity borrowed assets from liquidity providers which represents the total exposure um that the platform has to the maximum gains of of of their

position so it's almost like every position opens with its own micro Insurance Fund so there never will be a bank run it will never be that the Insurance Fund can only you know safely provide bailouts for 10% of the users and first come first serve you know you could come back to Lavana does this have to do with the fact that Lavana has LPS like liquidity providers whereas other Pro traded platforms don't so a lot of uh per trading platforms have um have uh like market makers um like you know dydx as market makers and you know sort sort of a few others so yes it is uh we are it is possible for us to be well funded um because we create a well-funded

position for each Trader using the liquidity provids um capital and they're paid for that and not only that the LPS you know most TR TR are bad Traders um and so the LPS actually get a bonus um when Traders lose as well okay so so LPS come into these pools I mean this is like similar to an amm right where you have not a not a double-sided amm with a double-sided amm you get impermanent loss so this is single sided staking yeah so you you just deposit Bitcoin you just deposit eth you just dep was it

Adam okay so so I'm looking at the liquidity pools so there's Adam USD btcusd a USD cusd and a yeah eth uh in in a regular yeah if I I was just depositing on um on any amm I'd say okay like these uh you know very uncorrelated assets uh are are are subject to high impermanent loss if there was a a price swing um so but but here for instance like I see like for atom USD liquid the LP supply for adom is like 378,000 or 384,000 and for um us oh no sorry that's it's broken up into Bond

liquidity pools and not bonded liquidity pools B okay so so what how does it work that then that that th those pool are not um are not uh equal right in in atom and USD oh because it's just single it's the the what we but the the terminology of atom over USD is that it's atom priced according to USD meaning that Traders uh are essentially making a bet that the price will go up and down according to the USD value as opposed to we could launch markets of adom eth atom Bitcoin atom whatever but the underlying asset that's in the liquidity pools is

only atom it's a single it's a single asset liquidity pool which makes it much more Capital efficient got it and so perspective when I mean there's like two ways you can use Lana at least I see like one is you could be trading you can be making Longs and shorts um and the other way is that you can be providing liquidity into these pools so this is uh a much U more conservative way to be leveraging Lana to to make money is you just like in these pools and you're making say 42% if it's bonded or uh 30% if it if it's unbonded um is that does that make sense exactly

exactly if you have a lower risk profile the um the single-sided staking probably makes more sense for you if you have a higher risk profile and you have some sense as to which way the market is going then the um you know then then leverage trading is is probably for you and if you're a more sophisticated Trader you know and you've got some you know little AI buddy or or you know some other um you know triggers um then the basis trading which is also delta neutral that's probably the most lucrative way to use the platform but it's more complicated we do intend to build out uh vaults that uh that will just do a lot of this uh these fancy you know footwork for you you could also

couldn't you all I mean one one strategy could also be to deposit atom Bond it uh benefit from that 40% APR on the atom and then take a short position on atom so projector if the price goes down yep absolutely and that's what a lot of people are doing that are using the platform is is that or what you can also do is um you could um you could go to a money market deposit usdc borrow adom deposit it you know and you might pay three 4% or whatever it is for that um and then um I don't know exactly what

the going rate is to borrow Adam I just made that number up um but whatever it is let's say that you let's say it was 20% to borrow adom so you borrowed adom um from your usdc and then you went deposited into Lana and then got 40% um so you're making 20% profit and you have no price exposure to the price of atom yeah I mean you could get liquidated on that money market if the price of itam drops significantly for for sure got that's the devil that's always the devils in the details you gotta you have to manage against your liquid ass okay I'm learning a lot here about like trading makes me want to go through

some of this stuff with a little bit more it is worth noting um we do block Americans uh you know leverage trading is not permissible in America so um you if you're American you should move to a different country um and uh that that's a France is lovely Portugal is amazing you know highly recommend yeah I mean the flip side of that is the tax right I mean at least in France yes uh that's true that's true yeah you shouldn't uh the tax is pretty high but but Portugal has a wi it's amazing yeah exactly yeah yeah Portugal is great I mean the Wine's not as good but I'm sure you get French wine in you

can yes you can of course yeah yeah um cool oh I want to talk a bit about some other things I saw on your docs that what what is this uh insolvency protection so so it's the insolvency protection is what you is what you describe right whereas because it's well funded everything is um protected against insolvency so that the platform as a whole is able to pay out um when there are positions now the downside to that is that if is that uh you know if a million people that there's only a certain number of positions that we can take on at any time because you know we the POS trying to open a position will

fail if the if the position can't be well funded yeah got it yeah yeah um like I've seen this also on other per per what's what's this concept of a mask price uh was what so I'm just asking like random questions here about perpetuals yeah there's this idea of a mask price a mask price yeah mask price we don't use that terminology um there's prediction or Mark Price sorry it's a Mark Price yeah yeah

sorry so a mark price is when you have um when you have an internal price to the market it's a market price you know short you know so it could be um that in the real world let's say Adam is trading at you know $66 and a half dollars but um you know on this particular exchange you know it's trading you know 10% higher or lower um so with with leverage trading uh many platforms have a Mark Price where the um where the Longs and the shorts will pull the Mark Price into

one direction or the other and then that's the price that um that you are that that it's possible to um uh to to enter a new position now the problem with that is that imagine um you know imagine a whale opens a long position that brings the Mark Price up 40% and then um the you know and then a bunch of other people fast follow and then that whale closes their position it's going to snap the Mark Price you know down by 10 15% which could liquidate

the all the new positions that came in after afterwards now when they get liquidated that continues to push the Mark Price down so what you end up with is something called cascading liquidations and many Perpetual platforms have suffered from cascading liquidations Lavana was built to prevent cascading liquidations by removing the Mark Price and um and and only having a uh an index price which is the real price powered by oracles and we use multiple oracles um and uh you know to prevent like uh you know certain exchange or Dex manipulation and we have um uh and then we have something called it's it's an

artificial slippage or like a a Delta neutrality fee you know to prevent whale manipulation uh to to you know to try and uh eat up open interest or change funding rates in in One Direction or another but that's that might be outside of the scope of complexity for you know what we want to cover in this call okay got it so I mean look taking a step back here a little bit I mean you guys just launched recently there's been I think like quite a bit of interest for this platform I've heard like lots of people tell me about it like I I asked on Twitter who on the show yeah fastest growing Cosmos uh product probably in the last year and a half so what's the future here like what

are you guys working on um you know post launch that you know is super Innovative that people might want to use uh so we actually just posted a um a road map um that uh which I'll talk a little bit about here so we're going to add support for liquid stake derivatives so you'll be able to leverage trade your staked eth your staked adom um this way you know you're not competing you're not having to give up um those like risk-free rates or those lowrisk rates uh while you're trading with your assets or you're lping with your assets um we're going to add support for metamask initially through injective and then

through metamask snaps on osmosis um we are going to add um synthetic markets where you'll be able to open and close positions with stable coins right now uh which is important for being able to cross margin which is um very important for uh um for Capital efficiency right now you know if you want to if you want to take a long position on bitcoin you need to deposit Bitcoin if you want to take a long position on eth You Need deposit eth so your deposit on eth can't be used to you know pay debt or to CH adjust your position on bitcoin so if you know if we're opening and closing markets with just stable coins so then it allows for cross margin and allows for um synthetic assets so that'll be on the road um

that's on our road map um better p&l planning for Traders so when you set a take profit when you set a stop loss you're going to be able to see exactly you know oh I um you know I now have uh this um you know if it if the market goes against me I'm GNA lose you know $7 if the market goes in my favor I'm gonna gain $300 so you'll be able to see that before you click you know to to to open an order um we've got uh we're going to incorporate better bridging of ethereum assets because we are a Cosmos app but most of the fun is happening on us is on uh on ethereum so we'll be you know just uh integrating better with ethereum um

we uh you know we're integrating more wallets we just added support for okx wallet um you know fin wallet uh I mentioned metamask before we'll have notifications um so you'll be able to get a notification on telegram or Discord or email if a a limit order or a takeprofit or a stop loss was hit um you'll also be able to follow trade your favorite Traders you know through a leaderboard And subscribe to them like oh this guy that's just made like $4,000 trading last month he just opened a new position so you'll get a notification off of that um we've got um uh we've got gas fee simplification you know a lot of people that come from ethereum they

don't have you know all these you know uh osmosis Zone gas tokens so you know we want we want to be able to just you know hide any of the fees you want to pay fees in eth fine we'll let you pay fees in eth so that that's going to be coming hopefully next week that'll be live um and then you know a bunch of other stuff but but those are some of the main things those are the tasks that are currently ticketed and Engineers are working on some someone asked on Twitter uh when can we leverage any asset ah yes so Lana is an acronym for leverage any asset and the goal of Lana is to um to not be is to be completely permissionless is to

make it just like on uniswap anybody can make a new market so Lana's goal is to make it that anybody can make a new leverage market now there's uh a lot of tweaking that goes into launching each New Market on Lana and we're still learning about the safety precautions and you know making sure that things work the way that they should so I think it's probably going to take us somewhere between one to two years where it can just be completely permissionless and anybody can just make any kind of new you know altcoin or whatever you know leverage market for it but that's ultimately the goal is there a lana token or like some sort of a there's not currently a token

um we are going to do a backdated airdrop um so we we had a gamei on Terra um with a with a very popular nft collection so uh those you know users of previous Lana products they will be entitled to an airdrop and then um the traders that are trading with our current product will also be entitled to an airdrop so we haven't um given out the we haven't published the details of um you know what the rewards are for current Traders but it's fairly common you know that uh you want to incentivize traders to come on and trade and then they'll be getting an airdrop um you know based on their trading vol volum cool um yeah any final final

thoughts or uh thing places you want to report people to other than yeah go check it out just you know when you see red candle days like what we see today don't be sad just be sad you weren't shorting so and come short on on Lana perss it's a the website is trade. lana. finance cool well joh thanks for coming on yeah you really uh taught me a lot today about uh about perpetuals I hope other people learn things too uh if this any other newb like me um and yeah glad glad you could come on and dig deep here thanks it was a lot of fun I appreciate

it